Coulda, woulda, shoulda. We've all realized after the fact that we missed a great opportunity at some point in our lives.
I think that there's a potential "coulda, woulda, shoulda" moment in store for many investors. You just might kick yourself later for not buying this growth stock right now.
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At the top
If you look up the word "vertex" in a dictionary, you'll find definitions such as "apex," "the highest point," or "the top." Vertex Pharmaceuticals (VRTX 0.24%) is aptly named because the biotech is definitely at the top of its game.
There are four drugs in the world that are approved to treat the underlying cause of rare genetic disease cystic fibrosis (CF). Vertex developed all of them.
The company's success in CF has made Vertex a ton of money. In 2021, Vertex posted a profit of $770 million on revenue of nearly $2.1 billion. It ended the year with a cash position totaling $7.5 billion.
What about potential rivals? Sure, there are a few. However, none of them has made it past phase 2 testing with their CF candidates. Even if a competitor manages to win regulatory approvals in the future, it will face a stiff challenge dethroning Vertex.
Don't think, though, that Vertex's monopoly in CF means that the company doesn't have growth potential in the market. The company thinks that it can increase its CF sales by nearly 50% in the coming years by securing additional reimbursement deals and regulatory approvals in younger age groups for its existing therapies. Vertex is also developing new drugs to treat the 10% of the market that aren't eligible for its current products.
Climbing other mountains
The main reason to buy Vertex is that the company is poised to expand into other indications beyond CF. There are three areas where Vertex could establish dominant positions.
First, Vertex and its partner, CRISPR Therapeutics, are evaluating CTX001 in a pivotal study in effectively curing sickle cell disease and transfusion-dependent beta-thalassemia. Previous clinical testing of the experimental gene-editing therapy has gone exceptionally well.
Vertex fully expects to file for regulatory approvals of CTX001 before the end of 2022. It thinks that the therapy could have a multibillion-dollar opportunity if approved.
Second, VX-147 demonstrated overwhelmingly positive results in a phase 2 study targeting focal segmental glomerulosclerosis, a type of APOL1-mediated kidney disease. Vertex has advanced the program into late-stage testing and broadened its scope to include the broader population of patients with APOL1-mediated kidney disease.
What's especially notable about this indication is that it affects more than 100,000 patients. That makes APOL1-mediated kidney disease an even bigger market opportunity for Vertex than CF is.
Third, Vertex recently reported encouraging results from two phase 2 studies of VX-548. One of those studies targeted acute pain following abdominoplasty surgery, while the other targeted acute pain following bunionectomy surgery.
Importantly, VX-548 isn't an opioid and isn't addictive. If the experimental drug performs well in phase 3 testing, a door to yet another market could open wide for Vertex.
A potential game-changer
These three clinical programs, along with the CF franchise, arguably make Vertex the best biotech stock on the planet right now. However, the company also has another program that could truly be a game-changer.
Vertex acquired Semma Therapeutics in 2019 to gain access to the small biotech's type 1 diabetes program. Since then, the company has reported promising early results for experimental therapy VX-880. Vertex plans to continue studying VX-880 but also hopes to file an Investigational New Drug application this year to advance another type 1 diabetes program into clinical testing.
The company states unabashedly that its goal is to develop a cure for the 2.1 million people who have type 1 diabetes. If it's successful, investors who didn't buy the stock now will really be kicking themselves.
